First quarter 2014 revenues were $132.7 million as compared with $112.6
million in the first quarter of 2013, an increase of 18% and an organic
growth (excluding Micron long term contract revenues) of 27%.

On a GAAP basis, net profit in the first quarter of 2014 was $39
million, representing $0.81 earnings per share, as compared with a net
loss of $23 million in the first quarter of 2013. Net profit for the
first quarter of 2014 included $150 million one-time net acquisition
gain derived from the high value assigned to Tower’s stake in TowerJazz
Panasonic Semiconductor Company (“TPSC”), the new company established in
Japan. In addition, we recorded a one-time allowance of $71 million
resulting from our decision to cease Nishiwaki fab operations in Japan,
reflecting mainly non-cash fixed-assets impairment; and a one-time non
cash charge of $7 million, net, resulting from the restructuring of the
Jazz’s bonds.

On a non-GAAP basis, as described and reconciled in the tables below,
2014 first quarter gross profit was $44.5 million, an increase of 32%
compared to $34 million in the first quarter of 2013.

On a non-GAAP basis, 2014 first quarter operating profit, which is akin
to EBITDA, was $27.5 million, an increase of 84% as compared to $15
million in the first quarter of 2013, and the operating margin improved
from 13% in the first quarter of 2013 to 21% in the first quarter of
2014.

On a non-GAAP basis, 2014 first quarter net profit was $19.5 million,
three times higher than the net income of $6.5 million reported in the
first quarter of 2013. The net margin improved from 6% of revenues in
the first quarter of 2013 to 15% in the first quarter of 2014.

On a GAAP basis, financing expenses, net, in the first quarter of 2014
include a one-time non-cash cost of $10 million resulting from the Jazz
bonds exchange deal from March 2014.

The main changes in the balance sheet are a result of the first time
consolidation of TPSC which comprise of the following items: (a) assets
which include $58 million cash, $37 million inventories and $240 million
property and equipment; (b) liabilities which include $85 million loan
from Panasonic, which we expect will be replaced by a Japanese bank
5-year loan and $85 million deferred tax liability resulting from the
property and equipment appreciation to fair market value; (c) $15
million shareholders’ equity; and (d) $150 million net gain from the
Panasonic transaction. This net gain mainly resulted from the property
and equipment appreciation to fair market value which was done in
accordance with GAAP and based on a third party appraisal opinion, net
of deferred tax liability.

Other changes in the balance sheet are a result of the Nishiwaki fab
cessation of operations due to classification of assets and liabilities
from long-term to short term, mainly its property and equipment and the
employees’ retirement allowance. The one-time allowance of $71 million
resulted from our decision to cease Nishiwaki fab operations in Japan,
is reflecting mainly non-cash impairment of the fixed assets of that
facility, all expected tangible and intangible impairment net values,
and considering all anticipated costs associated mainly with employees
and other liabilities.

Cash, short-term deposits and designated deposits as of March 31, 2014
were $183 million compared with $123 million as of December 31, 2013.
During the quarter, we generated $25 million in positive cash flow from
operating activities, excluding interest payments, and increased our
consolidated cash balance by $58 million as a result of the TPSC
venture. In addition, we invested $9 million, net, in fixed assets,
repaid $7 million, net, of debts and paid $6 million of interest
payments to our debtholders.

Shareholders' equity as of March 31, 2014 was $200 million as compared
with $141 million as of December 31, 2013. The net current assets
(current assets net of current liabilities) increased from $150 million
as of December 31, 2013 to $187 million as of March 31, 2014.

Business Outlook

TowerJazz expects revenues for its 2014 second quarter ending June 30,
2014 to be $230 million with an upward or downward range of 5% each.
Mid-range guidance represents an 84 percent of year over year growth and
a 73 percent quarter of quarter growth.

Management Remarks

Russell Ellwanger, Chief Executive Officer of TowerJazz, commented,
“Our first quarter of 2014 showed strong year-over-year growth of 18%
and more importantly 27% of organic growth (excluding Micron). Over
4,000 new masks entered our factories in the first quarter, comprising
168 masks sets that represent a year over year increase of 28% and
indicate long term organic growth.

“In addition to the above mentioned organic growth, we are very pleased
to have started a strategic and momentous business venture with
Panasonic, namely the start of TowerJazz Panasonic Semiconductor
Company. Starting the second quarter of 2014, we will consolidate TPSC
revenues, which initially can range between $90 to $105 million per
quarter, and will be built upon with external foundry business. We look
forward to the increased scale, scope, opportunities and new initiatives
that this new company brings us.

“We announced the ceasing of operations of the Nishiwaki facility. All
associated P&L costs were accounted for in the first quarter financials.
As previously stated, this decision was purely economic, targeting
increasing shareholders’ value by substantially reducing fixed costs
($130 million annually post cessation) and moving most all non-Micron
existing activities to our other manufacturing facilities.

TowerJazz will host an investor conference call today, May 15, 2014, at
10:00 a.m. Eastern time (9:00 a.m. Central time, 8:00 a.m. Mountain
time, 7:00 a.m. Pacific time and 5:00 p.m. Israel time) to discuss the
Company’s financial results for the 2014 first quarter and its second
quarter 2014 business outlook.

This call will be webcast and can be accessed via TowerJazz’s website at www.towerjazz.com,
or by calling: 1-888-668-9141 (U.S. Toll-Free), 03-918-0609 (Israel),
+972-3-918-0609 (International). The webcast is available to both
institutional and individual investors. Individual investors can listen
to the call at www.earnings.com.
Institutional investors can access the call via the password-protected
event management site (www.streetevents.com).
For those who are not available to listen to the live broadcast, the
call will be archived for 90 days.

As previously announced, beginning with the first quarter of 2007,
the Company has been presenting its financial statements in accordance
with U.S. GAAP. This release, including the financial tables
below, presents other financial information that may be considered
"non-GAAP financial measures" under Regulation G and related reporting
requirements promulgated by the Securities and Exchange Commission as
they apply to our company. These non-GAAP financial measures exclude (1)
depreciation and amortization, (2) compensation expenses in respect of
options granted to directors, officers and employees, (3) Nishiwaki Fab
restructuring costs and impairments, (4) amortization related to a lease
agreement early termination, (5) financing expenses, net other than
interest accrued, such that non-GAAP interest expenses and other
financial expenses, net include only interest accrued during the
reported period, whether paid or payable, (6) Gain from acquisition and
(7) income tax expense, such that non-GAAP income tax expense include
only taxes paid during the reported period. Non-GAAP financial measures
should be evaluated in conjunction with, and are not a substitute for,
GAAP financial measures. The tables also present the GAAP financial
measures, which are most comparable to the non-GAAP financial measures
as well as reconciliation between the non-GAAP financial measures and
the most comparable GAAP financial measures. As applied in this
release, the term Earnings Before Interest Tax Depreciation and
Amortization (EBITDA) consists of loss, according to U.S. GAAP,
excluding amortization related to a lease agreement early termination,
Nishiwaki Fab restructuring costs and impairment, gain from acquisition,interest and financing expenses (net), tax, depreciation and
amortization and stock based compensation expenses. EBITDA is not a
required GAAP financial measure and may not be comparable to a similarly
titled measure employed by other companies. EBITDA and the
non-GAAP financial information presented herein should not be considered
in isolation or as a substitute for operating income, net income or
loss, cash flows provided by operating, investing and financing
activities, per share data or other income or cash flow statement data
prepared in accordance with GAAP and is not necessarily consistent with
the non-GAAP data presented in previous filings.

This press release includes forward-looking statements, which are
subject to risks and uncertainties. Actual results may vary from those
projected or implied by such forward-looking statements and you should
not place any undue reliance on such forward-looking statements.
Potential risks and uncertainties include, without limitation, risks and
uncertainties associated with: (i) maintaining existing customers and
attracting additional customers, (ii) cancellation of orders, (iii)
failure to receive orders currently expected, (iv) the cyclical nature
of the semiconductor industry and the resulting periodic overcapacity,
fluctuations in operating results and future average selling price
erosion, (v) material amount of fixed costs, debt and other liabilities
and having sufficient funds to satisfy our fixed costs, debt obligations
and other short-term and long-term liabilities on a timely basis, (vi)
operating our facilities at high utilization rates which is critical in
order to defray the high level of fixed costs associated with operating
a foundry and reduce our losses, (vii) our ability to satisfy the
covenants stipulated in our agreements with our lenders, banks and bond
holders, (viii) our ability to capitalize on potential increases in
demand for foundry services, (ix) meeting the conditions set in the
approval certificates received from the Israeli Investment Center under
which we received a significant amount of grants in past years, (x) our
ability to accurately forecast financial performance, which is affected
by limited order backlog and lengthy sales cycles, (xi) the purchase of
equipment to increase capacity, the completion of the equipment
installation, technology transfer and raising the funds therefor, (xii)
the concentration of our business in the semiconductor industry, (xiii)
product returns, (xiv) our ability to maintain and develop our
technology processes and services to keep pace with new technology,
evolving standards, changing customer and end-user requirements, new
product introductions and short product life cycles, (xv) competing
effectively, (xvi) achieving acceptable device yields, product
performance and delivery times, (xvii) possible production or yield
problems in our wafer fabrication facilities, (xviii) our ability to
manufacture products on a timely basis, (xix) our dependence on
intellectual property rights of others, our ability to operate our
business without infringing others’ intellectual property rights and our
ability to enforce our intellectual property against infringement, (xxi)
our ability to fulfill our obligations and meet performance milestones
under our agreements, including successful execution of our agreement
with an Asian entity signed in 2009, (xxiii) retention of key employees
and recruitment and retention of skilled qualified personnel, (xxiv)
exposure to inflation, currency exchange and interest rate fluctuations
and risks associated with doing business locally and internationally,
(xxv) fluctuations in the market price of our traded securities may
adversely affect our reported GAAP non-cash financing expenses, (xxvi)
issuance of ordinary shares as a result of conversion and/or exercise of
any of our convertible securities may dilute the shareholdings of
current and future shareholders, (xxvii) successfully executing our
acquisitions and integrating them into our business, utilizing our
expanded capacity and finding new business, including successfully
operating TowerJazz Panasonic Semiconductor Company (TPSC), and
integrating our foundry business opportunities into TPSC fabs; (xxviii)
meeting regulatory requirements worldwide; (xxix) ceasing the Nishiwaki
fab operations in the course of restructuring our activities and
business in Japan, including the manufacture of products to fulfill all
of its customer purchase orders until its cessation date to allow us to
meet our financial projections, and the sale of TowerJazz Japan (‘TJP’)
assets in order to fund its liabilities, and settling any potential
claims from its employees, labor unions, suppliers, customers or other
third parties amicably to avoid deviations to our estimated accruals and
allowances, and so that it may pay all its employee and other
obligations and liabilities; and (xxx) business interruption due to fire
and other natural disasters, the security situation in Israel and other
events beyond our control.

A more complete discussion of risks and uncertainties that may affect
the accuracy of forward-looking statements included in this press
release or which may otherwise affect our business is included under the
heading "Risk Factors" in Tower’s most recent filings on Forms 20-F,
F-3, F-4, S-8 and 6-K, as were filed with the Securities and Exchange
Commission (the “SEC”) and the Israel Securities Authority and Jazz’s
most recent filings on Forms 10-K and 10-Q, as were filed with the SEC.
Future results may differ materially from those previously reported. The
Company does not intend to update, and expressly disclaims any
obligation to update, the information contained in this release.

Basic earnings per ordinary share according to GAAP for the
three months ended March 31, 2014 was calculated using $38,821
thousands of net profit divided by the weighted average number of
ordinary shares outstanding of 48.1 million; Fully diluted
earnings per share according to GAAP result of $0.59 for the three
months ended March 31, 2014 was calculated using $47,972 thousands
of adjusted net profit in accordance with GAAP divided by 81.2
million fully diluted weighted average number of shares,
convertible and exercisable securities.

Includes depreciation and amortization expenses in the amounts of
$39,944 and $36,747 and stock based compensation expenses in the
amounts of $297 and $248 for the three months ended March 31, 2014
and December 31, 2013 respectively.

(b)

Includes depreciation and amortization expenses in the amounts of
$29 and $(49) and stock based compensation expenses in the amounts
of $259 and $237 for the three months ended March 31, 2014 and
December 31, 2013 respectively.

(c)

Includes depreciation and amortization expenses in the amounts of
$200 and $205 and stock based compensation expenses in the amounts
of $750 and $351 for the three months ended March 31, 2014 and
December 31, 2013 respectively.

(d)

Non cash amortization recorded in 2013 as a result of an early
termination of an office building lease contract.

(e)

Non-GAAP interest expenses and other financing expense, net
include only interest on an accrual basis; GAAP financing expense,
net, in 2014 includes one-time non-cash cost of $9.8 million
resulted from the Jazz Notes exchange deal dated March 2014.

Includes depreciation and amortization expenses in the amounts of
$39,944 and $30,966 and stock based compensation expenses in the
amounts of $297 and $159 for the three months ended March 31, 2014
and March 31, 2013, respectively.

(b)

Includes depreciation and amortization expenses in the amounts of
$29 and $30 and stock based compensation expenses in the amounts of
$259 and $118 for the three months ended March 31, 2014 and March
31, 2013, respectively.

(c)

Includes depreciation and amortization expenses in the amounts of
$200 and $204 and stock based compensation expenses in the amounts
of $750 and $438 for the three months ended March 31, 2014 and March
31, 2013 respectively.

(d)

Non cash amortization recorded in 2013 as a result of an early
termination of an office building lease contract.

(e)

Non-GAAP interest expenses and other financing expense, net
include only interest on an accrual basis; GAAP financing expense,
net, includes (i) in 2014 - one-time non-cash cost of $9.8 million
resulted from the Jazz Notes exchange deal dated March 2014; and
(ii) in 2013 - one-time non-cash income of $6.5 million from the
banks' extension contract signed in March 2013.